Tag: Public Cloud

There were twice as many enterprises adopting infrastructure-as-a-service (Iaas) in 2013 over the previous year, according to a new study by Telsyte.

The Telsyte Australian Infrastructure and Cloud Computing Market Study 2014 showed that more than half of all organisations greater than 20 employees are now using public cloud IaaS for at least some part of their IT infrastructure, indicating that cloud computing within Australian enterprises is "skyrocketing".

The study has forecasted the total market value for public cloud infrastructure services to reach AU$650 million by 2018, up from AU$305 million in 2014.

Telsyte senior analyst Rodney Gedda said with cloud services presenting a low barrier to entry for IT infrastructure, the organisation penetration is growing strongly.

"There are a few key things driving this. One is the plain volume of organisations that will subscribe to cloud services that aren’t already. The second thing is cloud penetration within the organisation will increase, so organisations that are already using cloud services will spend more," he said.

"The third thing is the value of enterprise services in the cloud will expand. For example, if a company is running database workloads and billing systems on-premise, to move them into the cloud might be more of an exercise than just spinning up a VPS (virtual private server) with a credit card, so it’s higher value sell."

The study also sets out to dispel ongoing discussions that Australian organisations are being prevented by corporate and legal policies from using offshore cloud services. The Telsyte research indicates two-thirds of businesses that use the cloud are already using an offshore provider. Furthermore, 46 percent of CIOs said they are not subject to any restrictions on the use of offshore cloud services.

"The multinationals have made inroads into the local cloud market and local providers will need to compete on features and service levels, and not simply the fact that data is hosted in Australia," said Gedda.

The research identified there’s a growing trend in the adoption of a hybrid cloud model, which is expected to be in use by some 30 percent of enterprises by 2018. But on-premise IT is still considered a favoured choice. In fact, the study showed more organisations are implementing and considering private clouds, and are using virtualisation technology to implement a cloud architecture under their control.

"We can’t forget most of IT still runs on-premise, so enterprise IT is already an existing investment in service, storage, and infrastructure," Gedda said.

"For an organisation that has quite important workloads, they can’t just toss everything out and start again in the cloud, so the hybrid approach is a midpoint between organisations who want to keep key applications within the company’s boundaries, and between looking at moving some workload that may deem to be not as business critical, but they need to take advantage of the cloud benefits which are flexibility and agility."

Gedda concluded that there is now a "healthy range" of private cloud management options available to organisations that are looking to replicate the "scalability and manageability of public clouds with their own servers".

Networking giant Cisco Systems is the latest tech titan to enter cloud in a big way, pledging to spend $1 billion over the next two years. The company will use that money to build up its data center infrastructure, which will run the new Cisco Cloud Services, according to the Wall Street Journal.

Cisco wants to capitalize on customers’ growing desire to rent computing services rather than buying and maintaining their own machines, the basic impetus behind cloud computing. The service will be delivered with and through global partners, including Aussie telecom Telstra, tech distributor Ingram Micro and Indian IT company Wipro.

Cisco has built a massive business topping $49 billion in annual revenue. Most of that is selling networking equipment, and cloud offers an opportunity to diversify that revenue a bit. There’s no telling whether the company’s cloud intentions will fly or falter, as several hardware companies have entered the cloud computing fray to varying degrees.

Amazon Web Services is still the market leader in cloud infrastructure. While Amazon has been touting customer wins across a range of company types, AWS is still predominantly viewed as the place where startups get their infrastructure legs. Cisco’s entry into cloud will focus on the opposite end of the spectrum, targeting enterprise customers looking to shift to the cloud in order to reduce total cost of ownership or increase their agility.

Benefits for Partners

Cisco’s partners stand to benefit greatly, as this is a tech giant investing a number with a lot of zeros on building out a cloud infrastructure that they may leverage to compete with the big boys.

The move could also be the result of investor pressure for the company to shore up some kind of cloud strategy. Cisco’s revenue declined about 3.1 percent in the six months ended January 25, and a steeper sales drop is predicted for this quarter. Vendors selling equipment are struggling to keep up with cloud providers, which are the darling of the tech investment world, so many are forced into cloud to both diversify revenue and appease investors who view cloud revenue favorably. This strategy has worked to varying degrees with public companies, and arguably played a role in Dell’s decision to go private.

Cisco enters the cloud in the middle of a price war. AWS has been cutting prices, Microsoft has been cutting prices aggressively, and so has Rackspace (along with doing a major tech refresh on its cloud). There are also smaller competitors like Profitbricks slashing prices as well. Cisco is a late entrant to the cloud wars, but one that has the firepower to potentially be a main competitor.

It’s not easy transitioning a traditional technology company into the new cloud paradigm. However, a $1 billion dollar commitment is huge. It also means that Cisco will be building out a lot of data centers, which is good for the data center industry in general..

Cloud has already changed both business and everyday life – from consumers who perhaps unknowingly use it to access their favorite music, to companies that purposely harness its powerful resources. While much activity and buzz relating to cloud involves its technological capabilities, the benefits of cloud adoption actually extend into the business realm.

When utilized effectively, cloud capabilities offer numerous opportunities to drive business innovation. Recent technology and social connectivity trends have created a perfect storm of opportunity for companies to embrace the power of cloud to optimize, innovate and disrupt business models.

How do organizations use cloud today and how do they plan to employ its power in the future?

To find out, the IBM Institute for Business Value, in conjunction with the Economist Intelligence Unit, surveyed 572 business and technology executives across the world. An analysis of survey results revealed some game-changing business enablers powered by cloud.

Organizations that exploit these business enablers are driving innovation that extends well beyond IT and into the boardroom. Three business archetypes represent the extent to which organizations use cloud to impact company and industry value chains, and customer value propositions:

Optimizers use cloud to incrementally enhance their customer value propositions while improving their organization’s efficiency.

Innovators significantly improve customer value through cloud adoption, resulting in new revenue streams or even changing their role within an existing industry ecosystem.

Disruptors rely on cloud to create radically different value propositions, as well as generate new customer needs and segments – and even new industry value chains.